Greece announces debt swap to bundle 30 billion euro notes into new benchmarks

[November 15, 2017]   ATHENS (Reuters) - Greece on Wednesday invited holders of about 30 billion euros in its debt to swap 20 small outstanding bonds for five new benchmark ones.

The plan is to boost market liquidity before Greece emerges from bailouts in August 2018.

The eligible papers are 20 bonds that were issued in 2012 in a voluntary scheme where private bondholders took a 53.5 percent haircut - or value reduction - on the nominal value of their holdings.

"This is very significant news for Greek government bonds because it means more liquidity for the market," said DZ Bank rates strategist Sebastian Fellechner. "Greek bond spreads have already tightened in anticipation of this news."

The country has been kept afloat with rescue funds since 2010 and is anxious to draw a line under financial upheaval next year and be able to service debt itself.

The new bonds would have maturities of 5, 10, 15, 17 and 25 years, the announcement said. The move would smooth out maturities and add depth to a currently shallow market.

The offer is voluntary, with the expected deadline 1600 GMT on Nov. 28, the debt agency's announcement said. The settlement date is Dec. 5.

Euro coins are seen in front of a displayed Greece flag in this picture illustration, June 29, 2015. REUTERS/Dado Ruvic/File Photo

The exercise, it said, was to "normalise the (Hellenic) Republic's yield curve", providing the market with a limited series of benchmark securities anticipated to have "significantly greater liquidity" than the existing series.

About 80 percent of Greece's outstanding debt of 319 billion euros is held by its official lenders from the euro zone and the International Monetary Fund. Αbout 40 billion euros worth are tradable on the secondary market.

Bondholders include domestic banks, pension funds and foreign investors. About two thirds third of Greek debt is held by Greek pension funds and Greek commercial banks.

Greece mandated BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs, HSBC and Merrill Lynch as joint lead managers.

(Reporting by Lefteris Papadimas and Renee Maltezou in ATHENS, Dhara Ranasinghe in LONDON, writing by Michele Kambas Editing by Jeremy Gaunt)

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